The end of the earnings season is always a good time to take a step back and see who shined (and who didn’t). Let’s take a look at how HVAC and water systems stocks fared in Q2, starting with Advanced Drainage (NYSE: WMS).

Many HVAC and water systems companies sell essential, non-discretionary infrastructure for buildings. Since the useful lives of these water heaters and vents are fairly standard, these companies have a portion of predictable replacement revenue. In the last decade, trends in energy efficiency and clean water are driving innovation that is leading to incremental demand. On the other hand, new installations for these companies are at the whim of residential and commercial construction volumes, which tend to be cyclical and can be impacted heavily by economic factors such as interest rates.

The 9 HVAC and water systems stocks we track reported a very strong Q2. As a group, revenues beat analysts’ consensus estimates by 4.7%.

While some hvac and water systems stocks have fared somewhat better than others, they have collectively declined. On average, share prices are down 3.7% since the latest earnings results.

Advanced Drainage (NYSE: WMS)

Originally started as a farm water drainage company, Advanced Drainage Systems (NYSE: WMS) provides clean water management solutions to communities across America.

Advanced Drainage reported revenues of $1.00 billion, up 20.6% year on year. This print exceeded analysts’ expectations by 2%. Overall, it was a very strong quarter for the company with a solid beat of analysts’ EBITDA estimates and a beat of analysts’ EPS estimates.

Advanced Drainage delivered the weakest full-year guidance update in the group. Investor expectations, however, were likely higher than Wall Street’s published projections, leaving some wishing for even better results (analysts’ consensus estimates are those published by big banks and advisory firms, not the investors who make buy and sell decisions). The stock is down 2.1% since reporting and currently trades at $146.44.

Is now the time to buy Advanced Drainage? Access our full analysis of the earnings results here, it’s free.

Best Q2: AAON (NASDAQ: AAON)

Backed by two million square feet of lab testing space, AAON (NASDAQ: AAON) makes heating, ventilation, and air conditioning equipment for different types of buildings.

AAON reported revenues of $627 million, up 101% year on year, outperforming analysts’ expectations by 24.6%. The business had an incredible quarter with a beat of analysts’ EPS and EBITDA estimates.

AAON delivered the biggest analyst estimate beat and fastest revenue growth of the whole group. Although it had a fine quarter compared to its peers, the market seems unhappy with the results as the stock is down 14.3% since reporting. It currently trades at $81.25.

Is now the time to buy AAON? Access our full analysis of the earnings results here, it’s free.

Weakest Q2: Lennox (NYSE: LII)

Based in Texas and founded over a century ago, Lennox (NYSE: LII) is a climate control solutions company offering heating, ventilation, air conditioning, and refrigeration (HVACR) goods.

Lennox reported revenues of $1.55 billion, up 3% year on year, falling short of analysts’ expectations by 1%. It was a mixed quarter as it posted an impressive beat of analysts’ organic revenue estimates but full-year EPS guidance missing analysts’ expectations significantly.

Lennox delivered the weakest performance against analyst estimates in the group. As expected, the stock is down 22.9% since the results and currently trades at $419.38.

Read our full analysis of Lennox’s results here.

Northwest Pipe (NASDAQ: NWPX)

Playing a large role in the Integrated Pipeline (IPL) project in Texas to deliver ~350 million gallons of water per day, Northwest Pipe (NASDAQ: NWPX) is a manufacturer of pipeline systems for water infrastructure.

Northwest Pipe reported revenues of $159.5 million, up 19.7% year on year. This number beat analysts’ expectations by 3.1%. It was a stunning quarter as it also logged a beat of analysts’ EPS estimates.

The stock is down 9.5% since reporting and currently trades at $111.54.

Read our full, actionable report on Northwest Pipe here, it’s free.

A. O. Smith (NYSE: AOS)

Credited with the invention of the glass-lined water heater, A.O. Smith (NYSE: AOS) manufactures water heating and treatment products for various industries.

A. O. Smith reported revenues of $1.00 billion, flat year on year. This print topped analysts’ expectations by 1.4%. Overall, it was a strong quarter as it also recorded a beat of analysts’ EPS estimates and full-year EPS guidance slightly topping analysts’ expectations.

A. O. Smith had the slowest revenue growth among its peers. The stock is up 2.9% since reporting and currently trades at $63.86.

Read our full, actionable report on A. O. Smith here, it’s free.

Market Update

Over the past year, investors have been forced to repeatedly answer the same question: what is the market’s biggest risk? The answer has changed several times, and each shift has reshaped market leadership.

Late in 2025 and early 2026, artificial intelligence became the market’s primary uncertainty. Investors questioned whether AI would erode software pricing power and weaken competitive moats as AI made it easier to replicate once-differentiated products.

By the spring, technology took a back seat to geopolitics. The U.S. conflict with Iran briefly became the market’s dominant narrative, raising concerns about oil prices, inflation, and global growth. But as energy markets remained orderly and fears of a prolonged supply disruption faded, investors quickly turned their focus back to fundamentals.

Want to invest in winners with rock-solid fundamentals? Check out our Hidden Gem Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.